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Gold technical weekly outlook 03 to 07.02.2014

Gold April contract traded with bullish bias during the 1st half of the week and then nicely declined amid of expiry and settled with a decline of 172 rupees at 28641. Metal is fluctuating near 10-20-50 weeks SMA and settled well below 50 weeks SMA on weekly basis. Stability below 29200 remains bearish whereas failure of 28200 on closing basis may open more down side targets for bears. MACD is hovering near zero line and has fallen below signal line indicating longer term weakness in trend. Stochastic is also failing to cross 40 levels and again moving downwards and may keep prices under pressure in coming days. Metal has closed below 61.8% Fibonacci correction for the rally from 24830 to 35074 that is considered as a bearish sign on longer term picture. Immediate support is now seen near weekly low at 28520 any sustained move below that level would bring more weakness in this commodity and then attempt towards 28300-28200 zones can’t be ruled out. Key support would remain at 28000 and any failure below that level would bring more weakness and then we may see an extended down trend for a retest to 27100 and more down side. Resistance is now seen near 29300 any sustained move above that level would help this metal to resume recently occurred bullishness and then we may see attempts for a retest to 29600-29800 zones.

 

Trading range for the week is expected among the key support at 28280 and resistance at 29300.

 

Recommendation:

·         Selling gold below 28500 with stop loss above 28650 for targeting 28300-28100 and more down side might be appropriate.

·         In alternative scenario selling gold on jumps around 29000-29100 with stop loss above 29300 for targeting 28700-28400 and more down side might be appropriate.

·         In another scenario buying can be taken above 29300 with stop loss below 29000 for targeting 29600-800 and more upside might be appropriate. 

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